David Zervos

A few folks on X are making a lot of the sharp rise in the foreign-born vs native-born employment data for October. That's not the real story.

The household survey's nativity breakdown is only published seasonally unadjusted, it's noisy, and it's reset each January with new population controls. So monthly changes can't be compared with the seasonally adjusted headline figures. The meaningful comparisons are only year-over-year changes or 12-month averages.

On that basis: under Biden, the foreign-born share of US employment climbed ~2.4pts, from 16.8% in Jan 2021 to 19.2% by end-2024. Under Trump 2 it stopped rising and steadied at just over 19%…see the chart below.

October's jump from 19.1 to 19.5% is one noisy month, and the 12-mo average hasn't budged.

The more important story is in the seasonally adjusted data: over the last 3 months, full-time employment is up 1.54m while part-time is down 260k. These are massive gains for workers moving into full-time jobs!!!

For all those lost souls in the Fedwatching business who have been complaining about how a lack of forward guidance will create excessive market volatility, yesterday was a rude awakening. The Fed reaction function could not have been clearer. And the market moves could not have been more subdued: the 10yr and the S&P500 have barely budged.

A very important point from the WH today on the Q3 GDP data:
 
“Capital goods — the equipment and machinery that build American industry — now make up a record share of U.S. imports. At the same time, consumer goods fell to just 17% of goods imports, tied for the lowest level on record.”
 
The naysayers that see a large negative contribution to GDP from net exports in today’s data should take a deeper look. The US is not engaging in reckless consumption fueled by cheap foreign goods from mercantilist neighbors. Rather, it’s importing the capital goods necessary to expand productive capacity, reshore vulnerable supply chains, and increase the technological advance that will drive exceptional future economic growth!!

On Oct 1 the S&P500 closed at 7666 with 10yr yields at 5.24%. Today the S&P500 closed at 7663 with 10yr yields at 4.95%. Attributing the sharp yield moves of late to “risk-off” price action seems highly disingenuous - especially when the S&P500 sits a mere 1.5% below its record highs.

Back on set in NYC with my friends @cnbc @MelissaLeeCNBC @michaelsantoli